I think I see what you're saying. You want the user to be able to drag, rotate, and scale the picture underneath the fixed-in-place mask to center it as best they can, right?

This is more of a technical question than a design question, so aside from possibly moving this thread, we'll need some more technical details to be able to give a useful answer. Are you writing for the Mac or iPhone? Using OpenGL, Quartz, or something else for graphics? Is there a specific place you're stuck on the problem, or having trouble coming up with a general approach?